Current through Register Vol. 63, No. 9, September 1, 2024
(1) Applicable Law. Distributions under the
Public Employees Retirement System (PERS) shall be made in accordance with
Internal Revenue Code (IRC) Section 401(a)(9), including IRC Section
401(a)(9)(G), and the Treasury Regulations and Internal Revenue Service rulings
and other interpretations issued thereunder, including Treasury Regulation
Sections 1.401(a)(9)-1 through 1.401(a)(9)-9. The provisions of this
administrative rule and any other statute or administrative rule reflecting the
required minimum distribution requirements of IRC Section 401(a)(9) shall
override any distribution options that are inconsistent with IRC Section
401(a)(9).
(2) Distributions to
Members. Each member's entire benefit under PERS shall be distributed to the
member, beginning no later than the required beginning date, over the member's
lifetime (or the joint lives of the member and a designated beneficiary), or
over a period not extending beyond the member's life expectancy (or the joint
life expectancies of the member and a designated beneficiary).
(a) Required Beginning Date. For purposes of
this section, the "required beginning date" is April 1 of the calendar year
after the later of the following:
(A) The
calendar year in which the member reaches:
(i)
70-1/2 years of age in 2019 or earlier;
(ii) 72 years of age in calendar years 2020
through 2022;
(iii) 73 years of age
in calendar years 2023 through 2032; and
(iv) 75 years of age beginning in 2033 and
later; or
(B) The
calendar year in which the member retires.
(b) Designated Beneficiary. For purposes of
this section, a "designated beneficiary" means any individual designated as a
beneficiary by the member. If the member designates a trust as a beneficiary,
the individual beneficiaries of the trust shall be treated as designated
beneficiaries if the trust satisfies the requirements set forth in Treasury
Regulation Section 1.401(a)(9)-4.
(c) Calculation of Life Expectancies. For
purposes of this section and Chapter 238 benefits and the Pension Program,
which are part of the DB component of PERS, life expectancies shall not be
recalculated after the initial determination, unless otherwise required by
Treasury Regulation Section 1.401(a)(9)-5, Q&A-4 and Q&A-5. For
purposes of this section and the Individual Account Program, life expectancies
shall be recalculated but no more frequently than annually, unless otherwise
required by Treasury Regulation Section 1.401(a)(9)-5, Q&A-5.
(d) Limitations on Benefit Changes. A retired
member who has had a required beginning date shall not change a beneficiary
designation, benefit option election, or any other designation or election
except as permitted under Treasury Regulation Sections 1.401(a)(9)-4 and
1.401(a)(9)-6.
(e) Limitations on
Conversion of Joint Annuity to Single Life Annuity Following Divorce. A retired
member who has had a required beginning date may elect to convert a joint and
survivor annuity under Option 2A or 3A under Chapter 238 to a single life
annuity by reason of the member's divorce from the joint annuitant, subject to
the provisions of Treasury Regulation Section 1.401(a)(9)-6. This section
applies to ORS Chapter 238 benefits notwithstanding ORS
238.305(5) and
238.325(3).
(f) Limitations on Survivor Annuity
Elections. Except as otherwise required by a domestic relation order under ORS
238.465, if a member elects a
100 percent (100%) joint and survivor annuity (Option 2 or 2A under ORS
238.305(1) and
under 238A.190(1)(a)) and designates a nonspouse beneficiary who is more than
ten years younger than the member as calculated under Treasury Regulation
Section 1.401(a)(9)-6, Q&A-2, the benefit shall be actuarially adjusted to
provide for a reduced survivor annuity benefit to the extent necessary to
comply with federal requirements for qualified retirement plans.
(g) Limitation on Period-Certain Annuity
Election (Chapter 238 only). If a member elects a 15-year certain option
(Option 4 under ORS 238.305(1)),
and attains age 85 or older during the calendar year in which the benefits
commence, the benefit shall be actuarially adjusted to provide for a shorter
payout period to the extent necessary to comply with federal requirement for
qualified retirement plans.
(h)
Limitation on Selection of IAP Benefit Options. Benefit payment options
selected under the Individual Account Program shall be considered as payment
options under a DC plan and must comply with the requirements of Treasury
Regulation Section 1.401(a)(9)-5.
(3) Distributions to Beneficiaries of Retired
Members. If a retired member dies after annuity benefit payments have begun
under Chapter 238 or the Pension Program are required to begin under section
(2) of this rule, any death benefits shall be distributed at least as rapidly
as under the distribution method being used at the member's death.
(4) Distributions to Beneficiaries of Active
and Inactive Members. If an active or inactive member dies before annuity
payments have begun under Chapter 238 or the Pension Program are required to
begin under section (2) of this rule, any death benefits shall be distributed
by December 31 of the calendar year that contains the fifth anniversary of the
member's death, except as provided in the following:
(a) Distributions to Designated
Beneficiaries. The five-year rule shall not apply to any death benefit that is
payable to a member's designated beneficiary, if:
(A) The benefit is distributed over the
designated beneficiary's lifetime or over a period not extending beyond the
designated beneficiary's life expectancy; and
(B) The distributions begin no later than
December 31 of the calendar year that contains the first anniversary of the
member's death.
(b)
Distributions to Spouse Designated Beneficiaries. Notwithstanding subsection
(a) of this section, if the designated beneficiary is the member's surviving
spouse as defined by the Internal Revenue Code:
(A) The commencement of distributions under
subsection (a)(B) of this section may be delayed until December 31 of the
calendar year in which the member would have reached the age specified in
section (2)(a)(A) of this rule; and
(B) If the surviving spouse dies after the
member's death but before the distributions to the spouse have begun, the rules
of this section shall apply to any death benefit payable to any contingent
beneficiary as if the spouse were the member. Notwithstanding the foregoing,
however, this subsection shall not apply to any death benefit payable to a
surviving spouse of the deceased member's surviving spouse.
(5) The provisions of
this rule are effective on January 1, 2003.
Statutory/Other Authority: ORS
238.630,
238.650,
238A.130,
238A.170 & 238A.410
